Mining secretary Najib Balala (left) and Law Society of Kenya chairman Eric Mutua at the American Bar Association 2015 Africa forum on extractive industries in Nairobi on June 4, 2015. PHOTO | DIANA NGILA
What you need to know:
LSK says the decision in April by Mining secretary Najib Balala to revoke 65 mining licences over non-compliance was good for the industry, “which had been infiltrated by speculators.”
Mr Balala in April revoked mineral exploration licences for 65 firms over breaches of industry regulations while others had not been renewed after expiry.
Mining secretary Najib Balala on Thursday won crucial backing in his battle with a number of firms over cancelled licences after the Law Society of Kenya (LSK) said the minister had acted in the best interest of the country.
LSK chairman Eric Mutua said the decision in April by Mr Balala to revoke 65 mining licences over non-compliance was good for the industry, “which had been infiltrated by speculators.”
Mr Mutua, however, asked the government to give the companies a fair hearing to avoid expensive legal suits.
“Intermediaries or agents are known to be corrupt and obtain licences to sell or transfer to investors — we support the cancellation so that the country can start afresh,” Mr Mutua said at the opening of the American Bar Association 2015 Africa forum in Nairobi.
The forum aims to provide insight into legal policies and frameworks in the energy and extractive industries in East Africa.
Mr Balala in April revoked mineral exploration licences for 65 firms over breaches of industry regulations while others had not been renewed after expiry. The cancellation left about 4.5 million acres of land available for exploration, according to the ministry.
Mr Balala said on Thursday that the affected companies had been given 30 days to respond to notices before the cancellation in line with the law. The firms were to present their financial status and verify that actual work was ongoing in the minefields.
Mr Balala said only three firms have contested the revocations, including Mid Migori and Red Rock Resources PLc.
In August 2013, Mr Balala cancelled another set of licences, including that for Cortec Mining Company which took him to court in protest. The High Court upheld the revocation.
He said the enforcement of the Mining Bill 2014, which is awaiting the Senate’s approval, is set to streamline and boost the underperforming industry which accounts for a paltry one per cent of the country’s output. The sector contributes about four per cent of Kenya’s exports.
“This GDP contribution is expected to rise significantly to three per cent by 2018 and contribution to export earnings should rise up to 10 per cent by 2030,” said Mr Balala.
The mining Bill provides that 70 per cent of earnings from royalties be retained by the national government, 20 per cent (county in which the mineral is found) and 10 per cent for communities surrounding the minefields.
Half of the proceeds due to the national government will be funnelled to the proposed Sovereign Wealth Fund that will be used to cushion the economy against shocks associated with sudden massive forex inflows and to store wealth for future generations.
The remaining half will be channelled towards infrastructure development. The national government will also have a 10 per cent stake in large mining ventures. Also to be set up is a proposed National Mining Corporation — the government’s investment arm in the sector.
“Holders of mining licences are required within four years to list at least 20 per cent of their equity on the local stock exchange. Here is where Kenya’s can participate in the stock market in a transparent manner and companies can raise funds locally,” said Mr Balala.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
